consumption smoothing

I have found that if I set the borrowing constraint to $50,000, that ESPlanner is unable to provide a Lifetime Smooth Consumption Amount. Instead, it provides four very different Smooth Consumption Amounts for 4 distinct periods (e.g., 2016-2021, 2022-2025, and 2016-2027, 2028 and later).

If I set the borrowing constraint to $500,000, then ESPlanner is able to find a Lifetime Smooth Consumption Amount. However, in this case, the borrowing reaches $367,000 in 2017, which is unrealistic for me.

Income is the total income from all sources (wages, investments, SS, Real Estate)

Spending is the total of spending from all source (Housing, Taxes, Medicare..including expenses identified in the special expense entry) but does not include discretionary spending such as vacations or Green Fees

I have created a simple Jack and Sally Sprat planner file to experiment with the impacts of changes on net worth, spending, returns, etc.

I set inflation to zero for the base case and kept returns at 6%; not real world but a clean starting point;

The Sprats have $100K per year in cash flow income from SS and an annuity. They have $1M in their asset account (under mutual funds for simplicity sakes) and zero in retirement accounts to create a true base case.

I've recently tried funding (modeled as being funded in 2014) the Reserve Fund and noticed that the Consumption column now has a 14% step increase on the 10th year of the resulting Total Spending page. Consumption is constant before the step and also constant (at the higher step value) thereafter. I've also been modeling several Special Expenditures within the first ten years so I don't know if such a step in Consumption should be expected, although I assume that the point of consumption smoothing is that such a step is probably not expected.

I'm 58 and plan to retire at age 62. Whenever I set age in ESPlanner for collecting Social security to 62, then resulting report shows a smooth discretionary spending amount for the rest of my lifespan . However when I set Social security at age 70, the discretionary spending is not smooth--it shoots up at age 70 quite a bit.
I thought the advantage of ESPlanner was it was able to project smooth spending throughout the rest anticipated lifespan. What gives???

I am retired at age 62. I want to plan for level consumption. Since I am planning to defer social security until 70, I expect to draw more heavily on my retirement accounts until social security kicks in. In ESPlanner, the draw is the same each year. So my spending is less now and then spikes up when social security starts. How can I get a level plan?

Hard times call for hard thought. ESPlanner provides it. ESPlanner gets financial planning right by focusing on what matters -- your standard of living -- and by paying very careful attention to your taxes and social security. ESPlanner's economics-based approach helps you see the problems and dangers in conventional financial planning.

—Michael Rothschild, Professor of Economics and Public Affairs, Princeton University

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Disclaimer: ESPlanner and all other products provided by Economic Security Planning, Inc. (referred to hereafter as "we" or "our") are educational calculators designed to give you some input in mapping out your financial future, but should not be acted upon as a complete financial plan. MaxiFi Planner and the creators of MaxiFi Planner and any derivative products are not certified, registered, authorized, or any other type of financial planners. ESPlanner and its derivative products are simply tools for helping you think through your economic futures. Any suggestions should be viewed as informative inputs into your own decision-making with respect to saving and the purchase of life insurance. ESPlanner and its derivative products provide neither economic, financial nor tax advice, which can only be delivered to you by authorized professionals. The Social Security benefit estimates produced by ESPlanner are just that -- estimates. Only the Social Security Administration can tell you precisely the benefits to which you will be eligible or are eligible and the amounts you will receive. The estimates provided here may differ from the correct amounts due to mistakes in our computer code of which we are unaware or because of legislated changes in Social Security provisions of which we are unaware or because of delays in our updating our computer code for changes in Social Security provisions. This material is not intended to provide legal, tax or investment advice, or to avoid penalties that may be imposed under U.S. Federal tax laws, nor is it intended as a complete discussion of the tax and legal issues surrounding retirement investing. You should contact your tax advisor to learn more about the rules that may affect individual situations.